No Surprises Act
Starting January 1, 2022 (for most plans), the No Surprises Act and its implementing regulations apply to patients in health plans governed by the federal Employee Retirement Insurance Security Act (“ERISA”) which includes most insured and self-insured employer-sponsored benefit plans. The Act is meant to, among other things, restrict out-of-network providers from balance billing members who receive emergency care, air ambulance services, or non-emergency care from out-of-network providers at in-network facilities.
Check your health plan documents or contact your plan’s customer service department to know whether your plan includes coverage for out-of-network providers. When out-of-network provider coverage is included under the plan, different out-of-network benefit coverage amounts may be used to meet the unique needs of employers and members. Employers choose the type and level of coverage that will be offered to employees, subject to federal rules. Not all plans include out-of-network benefits for all types of claims.
Member responsibility for out-of-network provider claims
When a plan covers out-of-network provider services, the plan will set a maximum amount of reimbursement that will be allowed for out-of-network-provided services, which is typically defined in a member’s benefit plan documents. The allowed amount is often based on one of the methodologies listed below and usually will be less than the amount billed by an out-of-network provider. Members are responsible for paying their share of their plan’s defined cost-share for covered services provided by out-of-network providers.
Prohibition of Surprise Billing by Providers
Prior to January 1, 2022 (for most plans), out-of-network providers could bill a member for the difference, if any, between the amount allowed by their plan for out-of-network services and the out-of-network provider’s billed charge. These bills often left members financially responsible for large out-of-network payment amounts that an out-of-network provider demands reimbursement for that was not covered under the benefit plan. Federal legislation passed in late 2020 that establishes the federal budget for future years, includes rules effective January 1, 2022 (for most plans) called the No Surprises Act. These rules apply to patients in health plans governed by the federal Employee Retirement Income Security Act (“ERISA”) which includes most insured and self-insured employer-sponsored benefit plans. The purpose of the law is to restrict out-of-network providers from balance billing members under three situations:
- Emergency Services.
Health plans that provide emergency coverage must provide that coverage without prior authorization, without regard to whether a facility is in-network or out-of-network, and regardless of other terms of the plan, except for exclusions or coordination of benefits. Health plans also cannot deny claims for emergency coverage based on any purported delay between when symptoms began and when the patient sought care, or based on how long the symptoms were present.
Emergency health care facilities (including independent, freestanding emergency rooms and urgent care centers licensed to provide emergency care) also cannot balance bill patients for out-of-network emergency care. Instead, patient’s bills are limited to the same cost-sharing as for in-network emergency care, and any patient payments must apply to the patient’s in-network deductibles and out-of-pocket maximums.
Emergency care also includes post-stabilization services, or services and items provided as part of outpatient observation or inpatient or outpatient stay with respect to emergency visits. Only after a patient is stable and can be moved to an in-network facility using non-medical transportation or non-emergency medical transportation (as determined by the patient’s treating provider) can a facility or provider seek the patient’s consent to paying out-of-network rates (as described below).
- Non-emergency services provided by out-of-network providers at in-network facilities.
The No Surprises Act also prohibits out-of-network providers from balance billing patients for services provided at in-network facilities if the plan would have covered such services if provided by an in-network provider. It does not apply to out-of-network facilities (except with respect to emergency services as provided above). This surprise billing situation often arises when a physicians that the patient does not choose, such as anesthesiologists, pathologists, assistant surgeons or radiologists, provides care to the member at an in-network facility.
- Air Ambulance Services.
The No Surprises Act also bars balance billing for out-of-network air ambulance services if such services would have been covered by the plan if provided by in-network providers. These protections do not, however, apply to services provided by ground ambulances. Air ambulance services are expensive, and often provided on an out-of-network basis.
Can members waive protections under the No Surprises Act and consent to balance billing?
In certain situations, members are permitted to waive protections under the No Surprises Act and consent to balance billing by the out-of-network provider. If emergency services are provided by an out-of-network provider, the provider cannot balance bill for services until, among other requirements, the provider or facility furnishing post-stabilization services satisfies certain notice requirements and the participant consents to balance billing.
Additionally, in the case of non-emergency services provided by an out-of-network provider at an in-network facility, a provider may not seek the participant’s consent to balance bill for certain ancillary services, including (a) items and services related to emergency medicine, anesthesiology, pathology, radiology, and neonatology, whether provided by a physician or non-physician practitioner; (b) items and services provided by assistant surgeons, hospitalists, and intensivists; (c) diagnostic services, including radiology and laboratory services; and (d) items and services provided by a nonparticipating provider if there is no participating provider who can furnish such item or service at such facility.
Members should discuss what it means to waive their rights under the No Surprises Act with their health plan and their providers. Waiving protection under the Act can be costly to members.
Out-of-network provider payments under the No Surprise Act
Providers must publicly disclose the requirements of the Act to members and provide members information about where and how to report violations of the Act. Providers who knowingly balance bill members contrary to the Act are subject to a fine up to $10,000 per occurrence under the act. If a member receives care from out-of-network providers and the No Surprises Act protections apply, the member’s cost-sharing for the services is calculated at the in-network benefit level. The member cost share is based on (1) an amount determined by an applicable All-Payer Model Agreement; (2) if there is not an applicable All-Payer Model Agreement, an amount determined by a specified state law; or (3) if there is no applicable state law, the lesser of (a) the amount billed by the provider or facility, or (b) the “qualifying payment amount,” which, under the interim final rules, generally is the median of the plan’s contracted rates with participating providers for the item or service in the geographic region.
With respect to amount paid by the plan to the out-of-network provider, if the provider is unwilling to accept the plan’s payment, it may enter into open negotiations with the plan. The provider and plan are required to try and resolve the disputed payment amount for the next 30 days. After the 30-day period, providers unwilling to accept the final offer by the plan have four days to request an independent dispute resolution (“IDR”) process to review the payment amounts. The IDR process engages reviewers (arbitrators) who are required by the Act to consider, among other factors, the following when determining the amount the plan must pay to the provider:
- The calculated QPA
- The provider’s training and experience
- The complexity of the procedure or medical decision-making
- The patient’s acuity
- The market share of the health plan, and the provider or facility
- Whether the care was provided at a teaching facility
- The scope of services at the facility
- Any demonstration of good faith efforts to agree on a payment amount; and
- The contracted rates between the provider or facility and the plan, if applicable from the prior four years
The No Surprises Act is complicated, with many of its requirements still being finalized. Additional questions should be directed to your health plan.
Plan-determined, out-of-network payment levels
When a member incurs out-of-network claims that are not subject to the No Surprises Act, other methodologies are used to determine payment amounts. Plans often benchmark out of network claims against the following reimbursement databases and their associated claim administration methodologies to determine the reimbursement amount for out-of-network claims.
- CMS (Medicare reimbursement). The U.S. Centers for Medicare and Medicaid Services (“CMS”) publishes rates that Medicare allows for services provided by providers providing care to eligible Medicare recipients.
- Negotiated Rate. In some cases, your plan administrator or others on its behalf negotiate rates with out-of-network providers after a service was provided.
- Shared Savings Program or Third-Party Network Discounts. Your plan administrator and employer may decide to pay for access to contracts and payment discounts that certain third-party networks (often called “wrapper” networks) have with out-of-network providers. When this program applies, the out-of-network provider's billed charges will be discounted based on the agreed upon rates in the contract between the wrapper network and the provider.
- Pharmaceutical Methodology. Most benefit plans use a methodology that establishes the reimbursement amount based on published acquisition costs or average wholesale price for the pharmaceuticals. These methodologies are currently created by RJ Health Systems, Thomson Reuters (published in its Red Book), or Optum based on an internally developed pharmaceutical pricing resource. A plan may use this methodology as either the primary or secondary methodology to reimburse these services.
- Other Methodologies. These are typically used when the main methodology used by the benefit plan is not available or does not have a rate. They may include Fair Health (non-profit company that produces an expected commercial reimbursement amount based on in-network commercial health plan claims data); Optum, OptumInsights and others (for-profit company programs that set reimbursement based on an internally determined allocation of resources and time expended by a provider to provide the covered service); a percentage of an out-of -network provider’s billed charges for the service based on the level of charges that exceeds some amount that a large percentage of providers in a geographical area will accept for the services (old usual and customary coverage level); and the out-of-network provider’s billed charge amount.
The No Surprises Act requires that plans pay out-of-network claims that are subject to the Act as described above, which will typically be based on negotiation between the plan and provider, or the amount determined by the IDR entity.
Reimbursement policies affect the reimbursement amount
Reimbursement for out-of-network providers is subject to a plan’s reimbursement policies. Application of reimbursement policies typically result in a decrease to the allowed amount. Healthcare Highways Health Plan reimbursement policies are generally based on national reimbursement rules and determinations, along with state government program reimbursement policies and requirements.